Required: Complete all of the steps of the accounting cycle. This Excel workbook has been prepared to simulate an accounting information system. You will enter the daily transactions,month end adjusting entries, and closing entries. After each journal, you will post the entries to the general ledger, prepare the appropriate trial balances and financial statements. After you have entered the daily transactions and adjusting entries, review the general ledger, adjusted trial balance, and financial statements for accuracy. Make adjustments as necessary (to the journal entries). When you have verified the accuracy of the financial statements, complete the closing entries and post closing trial balance. The temporary accounts on the general ledger should have zero balances. Review of transaction analysis and accounting cycle Steps in the accounting information system. 1. Analyze the transaction a. Is it form the business or personal? b. It is financial? c. What type of account is it? (asset, lability, equity, revenue, expense, dividend) d. Does it increase or decrease the account? e. It is a debit or credit to the account? 2. Record the transaction in the general journal (chronological) 3. Verify the information was posted correctly from the journal to the general ledger. 4. Prepare the trial balance. 5. Record month end adjustments in the adjusting journal. Verify the information was posted to the general ledger correctly. a. a. Deferrals: expenses or revenues paid or received, recorded as assets or liabilities before they are used or earned. b. Depreciation: allocate the cost of fixed assets over the period covered. c. Accruals: revenues earned, expenses incurred but not yet paid or received, not recorded. 6. Prepare the trial balance. 7. Using the adjusted trial balance, prepare the financial statements: Income statement, balance sheet, and statement of retained earnings. 8. Record closing entries in the closing journal. Post the entries to the general ledger. 9 Prepare the post closing trial balance using the account balances from the general ledger. Practice Set Monthly transactions 1-Dec Issued 10,000 shares of stock at $10 per share. Raised $100,000 cash. 2-Dec Borrowed $60,000 cash at 10%. Principle and interest is due at end of 2nd year. (Month end adjustment = $500 interest/mo) 2-Dec Paid 1 month?s rent, $3,000. 7-Dec Purchased supplies inventory $3,100; paid cash. 8-Dec Purchased yacht $286,000; $100,000 cash payment, financed remainder at 8%, principle and interest due at end of 4 years. (Month end adjustment = 1,240 interest/mo.) 9-Dec Purchased 1 year of insurance $1,200; paid cash 15-Dec Sold $25,000 worth of services, on accounts receivable. 29-Dec Received $13,000 from accounts receivable. 30-Dec Issued cash dividend to stockholders, $4,000.

China Seas AIS Instructions Page 1 China Seas Co., Accounting Information System Required: Complete all of the steps of the accounting cycle. This Excel workbook has been prepared to simulate an accounting information system. You will enter the daily transactions,month end adjusting entries, and closing entries. After each journal, you will post the entries to the general ledger, prepare the appropriate trial balances and financial statements. After you have entered the daily transactions and adjusting entries, review the general ledger, adjusted trial balance, and financial statements for accuracy. Make adjustments as necessary (to the journal entries). When you have verified the accuracy of the financial statements, complete the closing entries and post closing trial balance. The temporary accounts on the general ledger should have zero balances. Review of transaction analysis and accounting cycle Steps in the accounting information system. 1. Analyze the transaction a. Is it form the business or personal? b. It is financial? c. What type of account is it? (asset, lability, equity, revenue, expense, dividend) d. Does it increase or decrease the account? e. It is a debit or credit to the account? 2. 2. Record the transaction in the general journal (chronological) Record the transaction in the general journal (chronological) 3. 3.Verify the information was posted correctly from the journal to the general ledger. 4. Prepare the trial balance. Record month end adjustments in the adjusting journal. Verify the information was posted to 5. 5. the general ledger correctly. a. Deferrals: expenses or revenues paid or received, recorded as assets or liabilities before theya. used or earned.a. Deferrals: expenses or revenues paid or received, recorded as are assets or liabilities allocate the are used or earned. over the period covered.b. Depreciation: b. Depreciation: before they cost of fixed assets allocate the cost of fixedearned, over the period covered. yet paid or received, not c. Accruals: revenues assets expenses incurred but not recorded.c. recorded. Accruals: revenues earned, expenses incurred but not yet paid or received, not 6. Prepare the trial balance. 7. Using the adjusted trial balance, prepare the financial statements: Income statement, balance sheet, and statement of retained earnings. 8. Record closing entries in the closing journal. Post the entries to the general ledger. 9 Prepare the post closing trial balance using the account balances from the general ledger. Practice Set Monthly transactions 1-Dec 2-Dec 2-Dec 7-Dec Issued 10,000 shares of stock at $10 per share. Raised $100,000 cash. Borrowed $60,000 cash at 10%. Principle and interest is due at end of 2 nd year. (Month end adjustment = $500 interest/mo) Paid 1 month's rent, $3,000. Purchased supplies inventory $3,100; paid cash. 8-Dec Purchased yacht $286,000; $100,000 cash payment, financed remainder at 8%, principle and interest due at end of 4 years. (Month end adjustment = 1,240 interest/mo.) 9-Dec 15-Dec 29-Dec 30-Dec Purchased 1 year of insurance $1,200; paid cash Sold $25,000 worth of services, on accounts receivable. Received $13,000 from accounts receivable. Issued cash dividend to stockholders, $4,000. Prepared by S. McDonald DeVry University qattachments_5c76747dcf104aeb0e8ca5516b9578d5b79f6b22.xlsx July 2014 China Seas AIS China Seas Company - Journal Entries General Journal Entries Date Description(Account Name) Debit 1-Dec Cash 100,000 CS issued common stock Check figures Prepared by S. McDonald DeVry University 495,300 General Journal Entries Page 2 Credit 100,000 List of Account Titles Accounts Receivable Accumulated Depreciation Cash Common Stock Depreciation Expense Dividends Insurance Expense Interest expense Interest payable Notes Payable Prepaid insurance Rent Expense Retained earnings Rental Revenue Supplies Expense Supplies Inventory Yacht 495,300 qattachments_5c76747dcf104aeb0e8ca5516b9578d5b79f6b22.xlsx July 2014 China Seas AIS General Ledger Page 3 China Seas Company - General Ledger Account: Date CASH Debit 100,000 60,000 Type of Entry* 1-Dec Cash 2-Dec Cash . Account: Debit Balance 100,000 160,000 Ending Balance Type of Entry* *Types of entries General Adjusting Closing 61,700 ACCOUNTS RECEIVABLE Date Credit Debit Credit Debit Balance Ending Balance Account: SUPPLIES INVENTORY Date Type of Entry* Debit Credit Debit Balance Ending Balance Account: PREPAID INSURANCE Date Type of Entry* Account: YACHT Date Type of Entry* Debit Credit Debit Balance Ending Balance Debit Credit Debit Balance Ending Balance Account: ACCUMULATED DEPRECIATION-YACHT Date Type of Entry* Account: INTEREST PAYABLE Date Type of Entry* Account: NOTES PAYABLE Date Type of Entry* Borrowed cash Debit Credit Credit Balance Ending Balance Debit Credit Credit Balance Ending Balance Debit Credit 60,000 Credit Balance 60,000 Ending Balance Account: COMMON STOCK Date Type of Entry* Debit Credit 100,000 Ending Balance Account: Type of Entry* 100,000 100,000 100,000 100,000 DIVIDENDS Date Credit Balance Debit Credit Debit Balance Ending Balance Account: RETAINED EARNINGS Date Type of Entry* Debit Credit Credit Balance Ending Balance Account: RENTAL REVENUE Date Type of Entry* Account: SUPPLIES EXPENSE Date Type of Entry* Account: RENT EXPENSE Date Type of Entry* Account: INSURANCE EXPENSE Date Type of Entry* Account: INTEREST EXPENSE Date Type of Entry* Account: DEPRECIATION EXPENSE Date Type of Entry* Debit Credit Credit Balance Ending Balance Debit Credit Debit Balance Ending Balance Debit Credit Debit Balance Ending Balance Debit Credit Debit Balance Ending Balance Debit Credit Debit Balance Ending Balance Prepared by S. McDonald DeVry University Debit Credit Debit Balance Ending Balance qattachments_5c76747dcf104aeb0e8ca5516b9578d5b79f6b22.xlsx July 2014 China Seas AIS Trial Balance Page 4 China Seas Company Trial Balance 31-Dec-14 Account name Cash Accounts Receivable Supplies Inventory Prepaid insurance Yacht Accumulated Deprec. Interest payable Notes Payable Common Stock Rental Revenue Rent Expense Insurance Expense Supplies Expense Interest expense Depreciation Expense Dividends Check figures Prepared by S. McDonald DeVry University Debit 371,000 Credit 371,000 qattachments_5c76747dcf104aeb0e8ca5516b9578d5b79f6b22.xlsx July 2014 China Seas AIS 31-Dec 31-Dec 31-Dec 31-Dec Date Adjusting entries Page 5 Adjusting transactions: (determine the amounts of the adjustments) One month of insurance has expired (show calculation here) Balance in supplies inventory at end of the month is $1,500. (show calculation here) One month's depreciation expense, $4,767. Record interest expense for one month (show calculation here) China Seas Company - Journal Entries Adjusting Journal Entries Description(Account Name) Debit Check figures Prepared by S. McDonald DeVry University 8,207 Credit 8,207 qattachments_5c76747dcf104aeb0e8ca5516b9578d5b79f6b22.xlsx July 2014 China Seas AIS Adjusted Trial Balance Page 6 China Seas Company Adjusted Trial Balance 31-Dec-14 Account name Cash Accounts Receivable Supplies Inventory Prepaid insurance Yacht Accumulated Deprec. Interest payable Notes Payable Common Stock Rental Revenue Rent Expense Insurance Expense Supplies Expense Interest expense Depreciation Expense Dividends Check figures Prepared by S. McDonald DeVry University Debit 377,507 Credit 377,507 qattachments_5c76747dcf104aeb0e8ca5516b9578d5b79f6b22.xlsx July 2014 China Seas AIS Financial Statements Page 7 China Seas Company Income Statement For the Month Ending December 31 Revenues: Rental Revenue Expenses: Rent expense Supplies Expense Insurance Expense Interest expense Depreciation Expense Total Expenses Net Income 13,793 China Seas Company Statement of Retained Earnings For the Month Ending December 31 Retained Earnings, December 1 Add: Net Income Subtotal Less: Dividends Retained Earnings, December 31 9,793 China Seas Company Balance Sheet At December 31, Assets: Cash Accounts receivable Prepaid Insurance Supplies Yacht Less: Accum. Depr. Total Assets 357,533 Liabilities: Interest payable Loans payable Total Liabilities Stockholders' Equity: Common Stock Retained Earnings Total Stockholders' Equity Total Liabilities & Stockholder's Equity Prepared by S. McDonald DeVry University qattachments_5c76747dcf104aeb0e8ca5516b9578d5b79f6b22.xlsx July 2014 China Seas AIS Closing entries Page 8 Prepare the closing entries 31-Dec Close the expense accounts into the retained earnings account 31-Dec Close the revenue accounts into the retained earnings account 31-Dec Close the dividend account into the retained earnings account Date China Seas Company - Journal Entries Closing Journal Entries Description (Account Name) Debit Check figures Prepared by S. McDonald DeVry University 40,207 Credit 40,207 qattachments_5c76747dcf104aeb0e8ca5516b9578d5b79f6b22.xlsx July 2014 China Seas AIS Post-Close Trial Balance Page 9 China Seas Company Post Closing Trial Balance 31-Dec Debit Cash Accounts Receivable Supplies Inventory Prepaid insurance Yacht Accumulated Deprec. Interest payable Notes Payable Common Stock Retained Earnings Service Revenue Rent Expense Insurance Expense Supplies Expense Interest expense Depreciation Expense Check figures Prepared by S. McDonald DeVry University Credit 362,300 362,300 qattachments_5c76747dcf104aeb0e8ca5516b9578d5b79f6b22.xlsx July 2014 China Seas AIS Grading Rubric Page 10 Case Study 1 Rubric Please note that this rubric provides a general guideline but you can score anywhere between 0 and the maximum number of points for that step depending on the accuracy and completeness of your work. Criteria Outstanding Journal entries use accurate accounts and Prepared amounts; and Journal debits and Entries (20 points)Step 1 credits are used correctly. 20 points Prepared Posting is Step 2 correct, leading Posted to the to accurate account General balances. Ledger (10 points)Step 2 10 points Correct Step 3 account names and balances Prepared a Trial Balance that arrive at a correct trial (10 points)Step 3 balance. Step 1 Prepared a Trial Balance 10 points Journal entries use accurate accounts and Prepared amounts; and Adjusting debits and Journal credits are Entries (10 points)Step 4 used correctly. Step 4 Prepared 10 points Steps 5 & 6 Posting is correct, leading to an accurate Posted and Prepared an trial balance. adjusted Trial Balance (10 10 points points)Steps All three Step 7 financial statements are Prepared prepared Financial accurately and Statements in an (20 points)Step 7 appropriate format. Prepared Financial 20 points Statements Journal entries Step 8 use accurate accounts and Prepared amounts; and Closing debits and Journal credits are Entries (10 points)Step 8 used correctly. 10 points Posting is correct, leading to an accurate Posted and Prepared trial balance. Post-Closing Trial Balance (10 points)Steps Prepared Steps 9 & 10 9 & 10 Good Poor Minor errors, such as incorrect account names or credits listed prior to debits. 16 points Posting is mostly correct, but minor errors are evident. 12 points 8 points Posting has several Posting is done poorly but does show errors that resulted in evidence of an attempt to complete. incorrect account balances. 8 points Some minor errors such as incorrect account names or incorrect totals due to errors in prior steps. 8 points Journal entries mostly use accurate accounts and amounts; and debits and credits are used correctly. 8 points Posting is mostly correct, leading to a mostly correct trial balance. 8 points Two of the three financial statements are prepared accurately and mostly in an appropriate format; one statement has some errors. 16 points Journal entries mostly use accurate accounts and amounts; and debits and credits are used correctly. 8 points Posting is mostly correct, leading to a mostly correct trial balance. Points Awarded Errors in Evidence of an attempt to complete the computations that journal entries. resulted in incorrect amounts to be debited and credited. 6 points 4 points Errors in Evidence of an attempt to complete the computations that trial balance. resulted in incorrect amounts to be debited and credited. 6 points 4 points Journal entries have Journal entries have some errors in use some errors in use of of accounts and amounts; and debits and accounts and credits are not used correctly. amounts; and debits and credits are only somewhat used correctly. 6 points 4 points Posting has several Posting is done poorly or not at all, errors, leading to a leading to inaccurate or no trial balance. trial balance with several errors. 6 points One of the three financial statements is prepared accurately and mostly in an appropriate format; two statements have some errors. 4 points One or fewer of four financial statements are prepared accurately and mostly in an appropriate format; three or all statements have some errors. 12 points 8 points Journal entries have Journal entries have some errors in use some errors in use of of accounts and amounts; and debits and accounts and credits are not used correctly. amounts; and debits and credits are only somewhat used correctly. 6 points 4 points Posting has several Posting is done poorly or not at all, errors, leading to a leading to inaccurate or no trial balance. trial balance with several errors. 10 points 8 points 6 points Points deducted for opportunity to revise the assignment for improvement. Posted and Prepared Post-Closing Trial Balance (10 points) Prepared by S. McDonald DeVry University Very Poor 4 points Total Points Earned Out of 100 Points -20 -20 qattachments_5c76747dcf104aeb0e8ca5516b9578d5b79f6b22.xlsx July 2014